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Licemer1 [7]
3 years ago
14

Bill Dukes has $100,000 invested in a 2-stock portfolio. $50,000 is invested in Stock X and the remainder is invested in Stock Y

. X's beta is 1.50 and Y's beta is 1.70. What is the portfolio's beta?
Business
1 answer:
ohaa [14]3 years ago
8 0

Answer:

the portfolio´s beta is 1.65

Explanation:

when the individual calculation of beta has been given, is possible to aggregate them as a weigthed average, so it is possible to apply te next formula

Beta Portfolio=w_{1} *\beta _{1}+ w_{2} *\beta _{2} + .... + w_{n} *\beta _{n}

where w is the weigthed value for each asset, in this particular case we have:

Beta Portfolio = \frac{50.000}{100.000}*1.50 +\frac{50.000}{100.000}*1.70

so with this result we get 1.65

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